The Effect of “Federal -Aid Swap” Programs and Davis-Bacon Prevailing Wages on Highway Construction Costs and Contractor Composition
Evidence From Iowa
Bibliographic Data
| ID | 11229649 |
|---|---|
| Authors | Frank P Manzo (Illinois Economic Policy Institute, Midwest Economic Policy Institute, La Grange, IL, USA), Frank Manzo (Economic Policy Institute, corresponding author) |
| Year | 2022 |
| Volume | 47 |
| Issue | 1 |
| Pages | 75-98 |
| Publication date | 2022-03-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Labor Studies Journal (JOURNAL) |
| Journal identifiers | ISSN: 0160-449X • E-ISSN: 1538-9758 |
| Publisher | SAGE Publications (PUBLISHER • US) |
| DOI | 10.1177/0160449x211049477 |
| OpenAlex | W3216836766 |
| Language | EN |
| References cited | 22 |
“Federal-aid swap” programs allow states and local governments to bypass federal Davis-Bacon prevailing wages and Disadvantaged Business Enterprise (DBE) goals by exchanging federal funds that have been allocated to highway projects with state funds. The Iowa Department of Transportation approved a federal-aid swap program in February 2018. Using data on more than 1,200 highway construction projects in Iowa from 2016 to 2020, I find that the cost of projects in the federal-aid swap program are not statistically different from those that were not swapped, after accounting for project size and complexity, project type, and project location. Regression results indicate that Davis-Bacon prevailing wages and DBE goals have no effect on total construction costs. However, the federal-aid swap program is statistically associated with a decrease in the likelihoods that a project is covered by the Davis-Bacon Act by 10 percentage points and DBE goals by 4 percentage points. Because the payment of Davis-Bacon prevailing wages is statistically associated with an 8 percentage-point decrease in the chances that a highway project is awarded to an out-of-state contractor, the federal-aid swap program may have increased the market share of out-of-state contractors at the expense of Iowa-based contractors
Business · Disadvantaged · Economic growth · Economics · Payment · State highway · Swap (finance · Transport engineering · Construction Project Management and Performance · Engineering · Fiscal Policy and Economic Growth · Public-Private Partnership Projects · Finance
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| Highly cited | No |
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